Follow by Email

Thursday, December 21, 2006

A federal grand jury investigation of Senate Majority Leader Joseph L. Bruno is focusing on hundreds of thousands of dollars funneled by a wealthy businessman into the senator's private consulting company to allegedly influence the powerful Republican lawmaker,

And yes, that businessman is Empire investor Jared Abbruzzese. Yesterday, the paper reported that Abbruzzese owns 15% of Evident Technologies, the company to which Bruno directed $500,000 in grants that almost always are directed to non-profit companies.

We're also starting to read of stirrings amongst state Republicans that they should have a new majority leader on Jan 3, when a vote is scheduled. At this point, that would probably be a good thing for Empire. Their extensive proposals for Saratoga were seen as being aimed at Bruno, and the Senator has expressed a preference for the for-profit racing model that the group espouses. However, as details of the FBI investigation of Bruno emerge and increasingly point to his relationship with Abbruzzese, it seems as if it would be difficult, if not impossible politically for Bruno to throw his support behind his friend's group now. And that's especially so considering that Bruno's own appointees to the Ad Hoc Committee voted for Excelsior. Whatsmore, the high profile nature of the investigation provides political cover for Gov-to-be Spitzer to give approval to Excelsior despite his now-overshadowed plane rides courtesy of that group's Richard Fields. For Empire, a fresh face in lieu of Bruno might be their best shot to remain in the running.

- Got a comment in response to this post regarding Murray Chass' column the other day, and I checked out the writer's blog, The Verifiable Truth. In this carefully researched blog, I read about the extensive casino holdings and ambitions of Marian Ilitch, the wife of Detroit Tigers owner, and Little Caesar's founder Michael Ilitch. Ms. Ilitch is not an owner of the Tigers, but Mr. Ilitch worked to legalize gambling in the state, and obviously benefits financially from his wife's success.

It's hard to see how Bud Selig could permit that arrangment and say no to Swindal and his one itsy bitsy slots-only casino. OK, probably two itsy bitsy slots-only casinos. In any event, I would guess that they will come up with some arrangement that Swindal be involved only in the racing part of Excelsior. Because that's what he's really interested in anyway, not the dumb slots. Right? After all, it says right on their website that they're exclusively dedicated and committed to making thoroughbred racing in New York the best in the world.

The Pittsburgh Penguins are definitely amongst the latter. The rejection of the application by Isle of Capri means no $290 million for a new arena that would keep the team in the city. Winning bidder PTIG Gaming has agreed to a Plan B in which it would contribute $7.5 million a year for 30 years, but that would mean that the team would have to kick in $8.5 million initially, and another $4 million over the same time period. Penguins fans are now faced with the loss of the team.

5 Comments:

You're righth about the existence of a double standard or perhaps its just a complete lack of understanding and grasp of the circumstances on Selig's part.

The Ilitches' casino has 2,618 slots and 136 table games. Not only is MotorCity Casino 100% controlled by Ilitch Holdings, Inc. But IHInc has made investments in Indian Casinos that are operational today and then others that are still planning visions.

Nutting wanted to add a small slot casino with just 500 machines to his ski resort and Swindal looks to do something similar.

What Selig should be concerned about is sports betting; MLB's roots on this matter go back to Shoeless Joe Jackson and his fellow Sox and have nothing to do with today's games of chance and the one armed bandits.

Selig's opened the door to "Grey" by allowing the Ilitch concurrent ownership in an expanding gaming empire. Either baseball and gambling don't mix period, or employment, ownership, etc. in gambling activity is ok unless it involves betting on sports.

One has to wonder what due diligence was done by Selif or his agents prior to granting Ilitch approvals and certainly what's been done in the decade since Marian Ilitch disclosed she was investing in gaming operations.

The gaming business now represents half of Mike Ilitch's $1.5 billion net worth according to Forbes. And Mike Ilitch has done nothing to demand a correction from Forbes.

If Swindal and Nutting are getting thumbs down from Selig; perhaps they'll be catalysts to demand Selig be more forthcoming on the Ilitch situation.

It's becoming evident that the NY racing franchise battle is evolving into back room intrigue coupled with negative leaks to the media, all setting up for the full court press in the legislature beginning next month. But I believe it will still result in Joe Bruno's "grand compromise" in the legislature despite the fact that Joe may no longer be in the driver's seat when the deal goes down. Anyone who has observed NY politics long enough is not at all surprised by Sen Majority Leader Bruno's emerging problems, in fact I've been wondering why it hasn't happened before now. The amount of power Sen Bruno has wielded for a decade + is a potent cocktail and seems to inevitably lead to overreaching. I'm sure there are many more twists and turns in all of this before Gov Spitzer signs the franchise bill. But my confidence that this will all result in the best outcome for NY racing is diminished in the process, how can it not be? I always get the feeling that the pols in Albany see NY racing as a gigantic political favor, a needy step-child, i.e., if it weren't for "us" you racetrack people would be out of business so you better play ball on our terms. Where is the racing community's leverage in all of this? As opposed to just being thankful for any bone thrown our way by the pols?

I’m not sure where the benefit to the State from racing lies. There certainly isn’t a good deal of pari-mutuel tax revenue that is received by the State; $11.4 million ($8.8 million from NYRA tracks) according to the New York State Racing and Wagering Board’s 2005 Annual Report. An additional $2.9 million if you account for uncashed tickets, which escheat to the State, and admissions taxes. The revenue produced is virtually none if examined in light of the cumulative state budget of $112.3 billion. That means racing directly contributes .0000127 percent. Recall that pari-mutuel wagering on horse races is permitted by the State Constitution solely on the basis of "raising reasonable revenue for the support of government." Yes, racing has residual effect on multipliers through farms and workers, but the impact is negligible. Green space preservation? Significant only if you accept the premise that the areas would otherwise be developed.

Lately the only fiscal noise Albany hears from NYRA, to paraphrase H. Ross Perot, is a giant sucking sound. The State retention from take-out is relatively low; the pari-mutuel tax is almost non-existent; the State is left holding a bunch of mortgages on Aqueduct and unsecured loans to NYRA.

Racing fans should be grateful for people like Senate Majority Leader Joseph L. Bruno because at least he’s willing to throw a bone to the industry. Without him, NYRA would probably have been out of business a decade ago.

All that said ... given the microscopic nature of impact that the racing industry on the State economic system, the Legislature should grant the franchise to whoever’s best for the racing industry because the additional monies are irrelevant ...

Let's just hope that Anon is not a key member of the legislative committee writing the NY racing franchise bill! If Anon's take were considered to be the true picture and the last word by the legislators, the state would shut down NY racing today and go all slots all the time at Aqueduct, Belmont, and Saratoga, and redevelop the remaining racetrack lands into their "highest and best" uses. But I don't believe that Anon's data regarding the NY racing industry's contributions to the NY gross state product give the complete picture of it's true impact. I think the Friends of NY Racing report has more encouraging economic impact data and projections. And although Anon seems to dismiss the less obvious contributions of the racing industry, many know that a big part of racing's value is in it's less obvious, intangible contributions, i.e., preservation of an endangered slice of American heritage andpreservation of open green space are the major contributors. The public and the legislators sense that if racing were allowed to die, and the racing plants turned over to slots and other re-development, the chances of racing returning to NY are probably slim to none, at least for the forseeable future. And any favors done NYRA by Joe Bruno you can be assured were more than re-paid in full including one of the choicest boxes at the Spa where he holds court in style as well as daily fund raisers to replenish his campaign war chest, and the race just prior to the 3 or 4 Grade I's on the Travers Day card is named for Joe, the Travers Day card, not just some run of the mill weekday card. That's just the re-payment that shows. As for Joe's help with the last franchise renewal, what other entity could have stepped in and operated the franchise at that time? The only alternative to NYRA then, as I recall, was a state takeover, which is what Gov Cuomo wanted, wasn't it? When they came out of the ether and realized that a state takeover of the tracks would result in some DMV-like operation, they decided that NYRA looked like the only choice who would be willing to operate in the straitjacket. And how did Joe say thanks and show loyalty to his old pals at NYRA? By going on the Empire payroll and pretending otherwise, and then jumping the NYRA ship when the chips were down, i.e., by acting like a true pol. No, Anon, you could never convince me that any pol did any favors for NYRA that were not more than re-paid in full. As for Joe, I would hope that NYRA would send him Spa seats for 2007 in Grandstand Section X or Y, you know, just as a quid pro quo " Thanks, Joe, for all of your support in 2006!" But, of course, they won't because you just never know, maybe, just maybe, NYRA gets back in the game and Bingo! Joe rides to the rescue once again! Stranger things have happened. Bottom line in all of this?: What's past is past. The question is: How can NY racing industry employees, owners, horsemen, and fans secure the best franchise bill possible so that NY racing continues to be # 1?

Hey ... another thing I'm not sure y'all are aware of, Mike & Marian Ilitch and their guy Michael Malik are bankrolling the proposed Shinnecock Indian Nation Tribal Casino - albeit not much more than a pipe dream at present -- in the Town of Southampton; Hampton Bays, Long Island.

In Michigan they've fought pari-mutuels and in 2004 helped bankroll another statewide gaming ballot measure to strictly limit the introduction of new games or expansions of non-casino gaming opportunities

It's even possible that the Ilitches would see slots at NewYork's tracks as a threat to their future earnings potential in The Hamptons and could be working behind the scenes to stop Swindal.

The Shinnecock and Team Ilitch have Mercury Public Affairs(Kieran Mahoney & Michael McKeon) & Brian Meara as lobbyists in NY. Familiar with these guys?

And Alan, thanks for your kind words earlier about The Verifiable Truth. Please don't hesitate to let me know if there's anyting you'd like to see me include.